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Australia shares fall as near-term growth outlook hit by virus fears

Published 07/02/2020, 05:22 pm
Updated 07/02/2020, 05:29 pm
© Reuters.  Australia shares fall as near-term growth outlook hit by virus fears
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* Coronavirus likely to hurt Australia GDP in near term - RBA

* Energy and miners lead losses

* Gold stocks rise on safe-haven appeal (Updates to close)

By Nikhil Subba

Feb 7 (Reuters) - Australian shares fell on Friday for their second straight weekly loss, as the country's central bank forecast slower growth in the near term following the coronavirus outbreak that has continued to grip global markets.

The S&P/ASX 200 index .AXJO closed down 0.4% to 7,022.60, after rising 1.1% on Thursday. On a weekly basis, the benchmark slipped 0.08%.

The Reserve Bank of Australia (RBA) on Friday cited the fast-spreading virus and the bushfires in the country, as it slashed forecasts for domestic economic growth in the near term to 1.9% in the year to June, down from a previous prediction of 2.6%. viral outbreak emanating from China, which had claimed more than 600 lives as of Thursday, could shave 0.2 percentage points off Australia's economic output in the current quarter, RBA said.

"Global growth is now likely to slow further in the first quarter of this year, taking it to its weakest rate since the global financial crisis ... the recovery, when it does come, will be both slow and uneven," said analysts at Capital Economics.

Central bank governor Philip Lowe said the virus outbreak represented a new source of uncertainty, adding that the risks to Australian economy would be "large".

The energy sub-index .AXEJ declined 1.7% at the close, while marking its fourth consecutive weekly loss.

Beach Energy Ltd BPT.AX fell 4% to close at its lowest since Dec. 5, while Woodside Petroleum Ltd WPL.AX shed 1.5%.

Mining companies .AXMM , which sell most of their produce to China, closed down 1.1% as Australian miners braced for a cyclone, leading iron ore to mark its biggest weekly loss since early August last year.

BHP Group Ltd BHP.AX ended nearly 2% lower, while Rio Tinto (LON:RIO) Ltd RIO.AX finished about 1% weaker.

The financials sub-index .AXFJ declined 0.2%, with three of the "Big Four" banks ending in the red. National Australia Bank NAB.AX edged down 0.1%, while Westpac Banking Corp WBC.AX lost 0.6%.

Bucking the trend, gold stocks .AXGD ended 1.7% higher as investors scurried to safe-haven assets. Bellevue Gold BGL.AX and Gold Road Resources GOR.AX each ended more than 9% higher.

New Zealand's benchmark S&P/NZX 50 index .NZ50 finished 1.4% higher at 11,760.88. This week, the New Zealand benchmark gained 0.4%, compared with last week's 1.4% decline.

Kathmandu Holdings Ltd KMD.NZ , the top percentage gainer in the index, rose 12.8% after the outdoor retailer forecast a nearly 40% rise in its first-half group underlying operating earnings.

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